ERISA Surety Bond Guide
SuretyBonds.com is legally licensed to issue ERISA surety bonds in all 50 states. Whether you work in New York, Nevada, Georgia or Illinois, we can get you bonded!
What is an ERISA Bond?
An ERISA bond is a type of fidelity bond used to protect people who participate in employee benefit plans such as a defined benefit plan, a pension fund, or a 401 K plan. The Employee Retirement Income Security Act (ERISA) of 1974 requires fiduciaries, or the individuals appointed to oversee and manage employee benefit plans, to obtain an ERISA surety bond protecting these plans and their benefactors from potential fraud, mismanagement and theft.
How much coverage do fiduciaries need?
Every fiduciary of an employee benefit plan and every person who handles funds of such plan needs to be bonded in an amount equal to 10% of the funds handled. However, when the plan includes non-qualifying assets, the bond amount is either 10% of plan assets being handled or the value of the non-qualifying assets, whichever is greater.
- Qualifying assets include items held by a financial institution such as a bank, insurance company, mutual funds, etc.
- Non-qualifying assets are those not held by any financial institution including tangibles such as artwork, collectibles, and real estate.
A fiduciary’s bond amount must be reviewed and updated as the plan’s assets increase or decrease.
ERISA surety bonds are not required for SEC-registered brokers and dealers subject to fidelity bond mandates of their own regulatory agency or organization.
How does an ERISA bond protect retirement savings?
ERISA bonds protect retirement accounts by guaranteeing money is available if the fiduciary mishandles the funds entrusted to them. If a claim is made against the bond and the principal to whom the bond is issued does not reimburse the plans these bonds cover, the surety will pay up to the full amount of the bond to cover the cost of the claim. For example, if money in a 401k retirement plan is lost due to embezzlement of funds by an employer, the bond is in place to replace those funds, meaning members of that plan are not at risk of losing their money due to an unscrupulous employer.
How much does an ERISA fidelity bond cost?
The cost of an ERISA Bond is a small percentage of the total bond amount, and bonds up to $500,000 can be bought online in just a few minutes. To find out exactly what you will pay for your ERISA bond, select the amount of coverage you need from the drop-down at the top of the page.
How long does it take to get an ERISA bond?
SuretyBonds.com typically issues ERISA surety bonds on the same day the bond is purchased, meaning you can receive your bond via email in just a few hours—no shipping required!
If you need more than $500,000 of coverage, you’ll have to provide a bit more information that will be subject to an underwriter’s review. Applicants with a criminal history will not be approved for ERISA bonding as they cannot be legally hired to oversee retirement plan funds such as pensions.
What is the Employee Retirement Income Security Act?
The Employee Retirement Income Security Act (ERISA) became federal law when it was passed in 1974 and is overseen by the United States Department of Labor. It was enacted with the intention of protecting individuals who contribute to pension and health plans in private industries. The law requires individuals to be given plan information, it sets participation, vesting, and benefit accrual standards, and creates grievance and appeal processes. ERISA also created the Pension Benefit Guaranty Corporation, guaranteeing certain benefits will be paid even if the benefit plan itself is discontinued.